Ecofin debate taxation of oil profits

O this will be discussed by the ministers during the informal meeting of the Council of Economic and Financial Affairs, which takes place on Friday and Saturday in Dublin under the rotating presidency of the EU held this six-month period by Ireland, preceded by a meeting of the rulers of the euro area on the morning of the first day.

Although it is not part of the initial agenda, the subject will be discussed after last August, Portugal, Germany, Austria, Spain, Italy and Poland asked the Irish Presidency to promote a discussion on a European framework to tax the extraordinary profits of oil tankers, recovering a request already made to the European Commission in spring.

The six countries argue that the response has a European dimension, including an analysis of how to more targetedly cover profits made abroad by multinational oil companies, taking into account the experience of the extraordinary contribution made in 2022.

Brussels has, however, maintained the position that taxation of these profits is the responsibility of the Member States, provided that national measures comply with EU law.

The European Commission has so far rejected the creation of a harmonised European tax.

Faced with the absence of a common solution, Portugal has advanced with a national measure, a temporary contribution of 33% on the extraordinary profits of companies in the crude oil and refining sectors.

However, the Portuguese initiative does not mean abandoning the defence of a European response, as Lisbon believes that a common solution would allow coordinated action and reduce the risk of distortions in the single market.

The pressure for a European response remains in the context of rising energy prices associated with the Middle East conflict, with several governments concerned about the impact on consumers and businesses.

Germany and Spain are at the forefront of defending a European intervention on extraordinary profits, according to Community sources heard by Lusa.

At the same meeting, and also at lunch on Friday, finance ministers will discuss the competitiveness of the European banking sector.

The discussion arises after the European Commission presented in July a report on the competitiveness of banking and the single banking market, which identified market fragmentation as the main challenges, the application of international standards to the specificities of the European economy and the growing complexity of the prudential framework.

European Commissioner for Financial Services and the Savings and Investments Union, Maria Luís Albuquerque, announced last week that Brussels will present in the first quarter of 2027 a “comprehensive legislative package” to strengthen the competitiveness of European banking and combat market fragmentation.

Among the priorities are the strengthening of the single banking market, the completion of the Banking Union, including a possible third pillar for deposit insurance, and the simplification of prudential rules, with greater proportionality for smaller and risky banks.

The ministers' debate in Dublin takes place when the Community executive prepares new proposals to deepen the integration of the banking sector and better channel European investment savings.

Portugal will be represented at the meeting by Portuguese minister of tutelage, Joaquim Miranda Sarmento.

This informal meeting brings together the 27 EU Finance Ministers and serves for an exchange of views on strategic issues for the European economy without decision-making.